ENERGY POLICY

Subsidy battle reignites as debt deal preserves tax breaks

Elana Schor, E&E reporter

Greenwire: Monday, August 1, 2011

As Democrats' battle to cut oil-industry tax breaks as part of a debt deal ends in defeat today, environmentalists are charging GOP lawmakers with skewing a closely watched energy-subsidy study in order to inflate federal renewable supports relative to those for fossil fuels.

The political jousting over the Energy Information Administration's recently completed study of government benefits to oil, coal, natural gas, nuclear and renewables suggests that the hours-old deal to raise the debt ceiling -- which does not yet touch taxes -- is likely to reboot the springtime clash over energy subsidies in the latter half of this year.

The EIA study at issue is an update of a 2007 analysis that found $17.9 billion in quantifiable subsidies for various energy sectors that year. But the terms of that report and the current GOP-requested sequel included only energy-specific benefits with a measurable budget impact, which excludes many of the oil and gas tax benefits unsuccessfully targeted this year by President Obama and many in his party.

Frustrated by the constraints on the EIA report, which is likely to enter heavy rotation in coming congressional tax reform debate, green advocates filed a freedom-of-information request today seeking all communications between the nonpartisan energy-statistics agency and the three House Republicans who asked for the new subsidy analysis.

The study sought by Reps. Jason Chaffetz (R-Utah), Roscoe Bartlett (R-Md.) and Marsha Blackburn (R-Tenn.) restricted EIA to "models that have long been used by the fossil fuel lobby to defend the massive government handouts it receives," environmentalists at Greenpeace, Oil Change International and the Checks and Balances Project wrote in their request for data today.

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Arguing that fossil-fuel industries "are clearly seeking to change the conversation" by persuading voters that renewable support is too high, the groups added: "We are particularly interested in determining if there was any budgetary pressure applied by members of the House to get the EIA to release this deeply flawed and misleading piece of propaganda."

The three House Republicans asked the EIA to assess federal energy subsidies using the same models employed in 2007, when a study sought by Sen. Lamar Alexander (R-Tenn.) found renewables receiving $5.1 billion in government support, compared with $2 billion for oil and natural gas, $1.7 billion for nuclear power and $943 million for coal.

The 2010 update has yet to see formal release by EIA, and a copy obtained by the green groups contains a lengthy explanation of the types of subsidies overlooked under the constraints of the congressional request. A copy of the update obtained by the green groups behind today's Freedom of Information Act (FOIA) plea shows the total value of government energy support doubling, from $17.9 billion to $37.1 billion, with all sectors seeing their subsidies increase.

Renewables, however, saw by far the biggest jump in federal benefits using the EIA's models -- from $5.1 billion in 2007 to $14.1 billion in 2010, $6.2 billion of which was related to the Obama administration's economic stimulus law.

Meanwhile, the debt-limit deal careening its way around the Capitol this morning is poised to give energy tax reform new life in the fall, despite its omission of any changes to current support for oil, renewables or ethanol. A 12-member joint committee set up by the pact would be empowered to pitch broad tax reform, including the closure of energy-sector loopholes, as part of a legislative package due for votes before Christmas.

Yet lawmakers still could reject any tax changes proposed by that 12-member committee, teeing up spending sequestrations at domestic and defense agencies that could pile new cuts on the already sliced budgets at U.S. EPA, the Energy Department and the Interior Department (E&E Daily, Aug. 1).

The first step in that energy-tax debate could come as soon as Wednesday, when the House Ways and Means Committee has scheduled a hearing on the issue (E&E Daily, Aug. 1).

The debt deal drew its first fire today from environmentalists, with Friends of the Earth urging lawmakers to reject it and blasting its failure to "mak[e] corporations pay the costs of their pollution" and "end giveaways to oil and gas corporations" such as those criticized by Democrats in recent months.

"But that's not what this agreement does," Friends of the Earth President Erich Pica added in a statement.

Click here to read a copy of the recently completed EIA report on 2010 energy subsidies.